Thursday, August 14, 2008

Recently Chicago Magazine, the magazine of the University of Chicago, posted a short bit on a protest by a group of about 100 faculty members against the Milton Friedman Institute. The Chicago Maroon has more details.

More than 100 academic faculty members have united in protest over the University’s soon-to-be established Milton Friedman Institute, sending a letter to President Robert Zimmer in which they take issue with the economics research institute’s name and its foundational precepts, and requesting a meeting of the complete faculty to discuss their concerns.

And just what would those concerns be?

...approximately eight percent of the University’s faculty members were concerned enough over what they believe to be the Institute’s potential biases that they formally expressed their concerns to Zimmer and Provost Thomas Rosenbaum.

“It was a heterogeneous group,” said Bruce Lincoln, a professor at the Divinity School. “But we all felt a reason to discuss this.”

Lincoln, who helped draft the letter, said that some of the issues raised by the faculty were a perceived ideological bias for the Institute toward a conservative agenda, disciplinary narrowness, and the amount of money being spent. The University plans to invest $200 million in the project.

“This endeavor could reinforce among the public a perception that the University’s faculty lacks intellectual and ideological diversity,” the faculty wrote.

Ah yes. They want a very diverse faculty. Every one should think like them. i.e. be anti-capitalist. Not bad for a University founded by John D. Rockefeller.

Now for the irony part. In the same issue of the magazine, an article reprinted in the Maroon, discusses the best way to allocate scarce water resources where people have water rights. And what was the conclusion?

One solution, says Coursey, is to persuade senior-rights holders to curb their water consumption and sell the surplus to junior owners for profit. Under current laws, community members can’t exchange or sell water rights; Coursey’s market system would change that. Think of it like a lemonade stand, he says. “I have water. You want to buy it. We make a deal.” Based on market prices, owners would decide whether to keep the water to which they’re entitled or else lease or sell their rights on the open market.

“People are slowly but surely realizing the power of markets” to cope with scant environmental resources, says Coursey, whose past research includes evaluating the relative value people attach to environmental quality versus other public goods, such as education and safety. “Regulatory markets not only help you achieve your goals, but help you achieve them more efficiently.” To this end, Coursey and researchers at the University of New Mexico (UNM) have conducted economic experiments to predict how a water market would work. Using UNM undergraduate volunteers to represent farmers, city water officials, and environmental groups, the researchers track quantities traded and sale prices under differing conditions, such as average water supply or predicted drought.

So how did the article conclude?

As with any stock exchange, participation in the Mimbres market is voluntary. “If you want to sit on your rear end and do the same thing that your great-grandfather did with the water, that’s fine,” says Coursey. Those who choose to buy and sell can boost their profits while also helping manage a scarce natural resource. “Greed,” he says, “leads to a water system that is much more efficient than a situation where trading isn’t allowed.” Such avarice is good news for Mimbres residents who otherwise might not have enough water to go around.

So there you have it. Greed, properly harnessed through property rights and markets (commonly called capitalism) is the best way to allocate scarce resources. Something capitalists have been saying for quite some time. Only now we have evidence not just anecdotes. Actually more evidence. Since there always was a lot. For instance, hear much about the USSR these days? I thought not.

So I sent an e-mail to Chicago Magazine saying:

I note in the latest Chicago Magazine (July-Aug. 2008) that 101 Professors decry naming an economics institute after Milton Friedman. In the same issue another scholar's work (Don Coursey) shows that property rights and greed are the best way to allocate scarce (water) resources.

Evidently there are a number of UC professors pontificating well outside their areas of expertise. Too bad there is no list (or a link to a list) of the 101 so future students can tell which professors to avoid.

Well they got back to me saying my letter may be published in the next issue. We will see if they have the courage.

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